In October this year, the markets regulator came out with a discussion paper on review of mutual fund regulations. The key proposals included reduction in the total expense ratio (TER) mutual fund charges by 15 basis points (bps) for open-ended schemes and up to 25 bps for closed ended schemes. The mutual fund industry has raised concerns over the revised TER.

TER includes all the total expenses charged to investors at any point of time.

In order to facilitate greater clarity and transparency, the markets regulator had recommended to exclude all statutory levy i.e. Securities Transaction Tax (STT), Goods and Services Tax (GST), Commodity Transaction Tax (CTT) and stamp duty from the expense ratio limits along with the present permissible expenses for brokerage, exchange and regulatory fees.

The draft regulations also suggested revision in brokerage and transaction charges over and above the TER limit. It proposed to revise the brokerage charge from 12 bps to 2 bps for cash market transactions and 5 bps to 1 bps for derivative transactions.

“It is expected that the board will have a liberal view (on brokerage charges) and may allow the limit between 3-7 bps,” said an industry player.

The board will also take up the recommendations of the HLC, constituted by SEBI to review conflicts of interest, investment and liabilities of its board members. The committee proposed ten recommendations, including a multi-tier disclosure regime, investment restrictions, structured recusal processes and a robust whistle blower mechanism. It had recommended that the chairman, whole-time members (WTMs) and SEBI employees at the level of chief general manager (CGM) and above will be required to make a public disclosure of assets and liabilities statements.

The SEBI board may discuss the long-pending issue of lock-in of pledged shares held by persons other than the promoters at the time of the initial public offering (IPO). The current ICDR regulations require that the entire pre-issue capital held by persons other than the promoters, except shares held by certain specified categories of shareholders, need to be locked-in for a period of six months from the date of allotment in the IPO. However, the existing system of the depositories does not allow lock-in of certain shares such as those under pledge. This creates challenges for the issuer at the time of IPO.

The board is also likely to discuss the requirement of abridged prospectus and replace it with a concise document, aimed at increasing the engagement of the retail investors and participation in public issues, sources said.